November 21, 2007

 

India corn futures seen steady in near term

 

 

India's corn futures are expected to trade in a narrow range over the next 10 days as a bumper production is likely to be offset by robust export and domestic demand, analysts and a trader said.

 

Analysts expect corn futures on the National Commodity and Derivatives Exchange (NCDEX) to move within 40 rupees a quintal range in the near term.

 

A. Rajalaxmi, an analyst with Karvy Comtrade, said the December contract will trade between 692-470 rupees but a good fall will come around February due to arrival pressure.

 

Despite higher production and a larger area under the rabi or winter corn crop due for harvest in February, the December contract has risen nearly 3 percent since October 1.

 

Arrivals in the premier Nizamabad market were around 2,000 quintals on Tuesday (November 20) and will be steady till end-November, after which it may decline, said Mohanlal Vedant, trader and president of Nizamabad Chamber of Commerce and Industry.

 

India expects a record summer-sown corn production of 13.07 million tonnes in 2007/08, up 14.3 percent from the previous close, according to the federal farm ministry's first production estimates.

 

According to trade estimates, India has exported around 500,000 tonnes corn this month and exports may rise further for use as biofuels.

 

Demand also soared after China restricted its exports due to lower production this year, analysts said.

 

Lopa Sanghvi, an analyst with STCI Commodities Ltd, sees good export demand from southeast Asia which is unmindful of prices adding if prices are down, it is going to be limited.

 

Rising demand from the domestic poultry and cattlefeed sector will also cap losses. Demand for corn, used as livestock feed, typically rises during the winter due to increase in consumption of poultry products.

 

Buoyant international prices due to good demand for ethanol, used as biofuel, will also check a fall in prices, analysts said.

 

More or less, the contracts are going to be steady but January contract is seen to cross 780 rupees if demand continues, Sanghvi said.

 

Corn futures on the NCDEX were a touch lower on Tuesday, with the most-traded December contract down 0.20 percent at 745 rupees a quintal at 1:10 p.m.

 

US$1 = 39.225 Indian rupee (as of November 20, 2007)